SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
Filed by the registrant X
---
Filed by a party other than the registrant ___
Check the appropriate box:
__ Preliminary proxy statement
X Definitive proxy statement
- ---
__ Definitive additional materials
__ Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
USANA, INC.
(Name of Registrant as Specified in its Charter)
Payment of filing fee (Check the appropriate box):
X No fee required.
--
__ $125 per Exchange Act Rule 0-11(c)(1)(II), 14a-6(i)(1), or
14a-6(j)(2).
__ $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
__ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies: N/A
(2) Aggregate number of securities to which transaction applies: N/A
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: N/A
(4) Proposed maximum aggregate value of transaction: N/A
___ Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the form or schedule and the date
of its filing.
(1) Amount previously paid: N/A
(2) Form, schedule or registration statement no.: N/A
(3) Filing party: N/A
(4) Date filed: N/A
<PAGE>
[USANA LOGO]
3838 West Parkway Blvd.
Salt Lake City, Utah 84120-6336
(801) 954-7100
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 23, 1998
To the Shareholders:
Notice is hereby given that the Annual Meeting of the Shareholders of USANA,
Inc. ("the Company") will be held at the Hilton Hotel, 150 West 500 South,
Salt Lake City, Utah on Tuesday, June 23, 1998, at 10:00 a.m., Mountain
Daylight Time, for the purposes discussed in the following pages and which are
made part of this Notice:
1. To elect five directors to serve for one year each, until the next Annual
Meeting of shareholders and until his or her successor is elected and shall
qualify;
2. To approve the Board of Directors' selection of Grant Thornton LLP, as the
Company's independent public accountants;
3. To approve amendments to the Company's 1995 Long-term Stock Investment and
Incentive Plan coincident with the consolidation of the Director Stock Option
Plan and the Long-term Stock Investment and Incentive Plan, without increasing
the aggregate number of shares available for issuance under the combined
plans; and
4. To consider and act upon any other matters that properly may come before
the meeting or any adjournment thereof.
The Company's Board of Directors has fixed the close of business on April 24,
1998, as the record date for the determination of shareholders having the
right to receive notice of, and to vote at, the Annual Meeting of Shareholders
and any adjournment thereof. A list of such shareholders will be available
for examination by a shareholder for any purpose germane to the meeting during
ordinary business hours at the offices of the Company at 3838 West Parkway
Blvd., Salt Lake City, Utah, during the ten days prior to the meeting.
You are requested to date, sign and return the enclosed proxy, which is
solicited by the Board of Directors of the Company and will be voted as
indicated in the accompanying proxy statement and proxy. Your vote is
important. Please sign and date the enclosed Proxy and return it promptly in
the enclosed return envelope whether or not you expect to attend the meeting.
The giving of your proxy as requested hereby will not affect your right to
vote in person should you decide to attend the Annual Meeting. The return
envelope requires no postage if mailed in the United States. If mailed
elsewhere, appropriate postage must be affixed. Your proxy is revocable at any
time before the meeting.
By Order of the Board of Directors,
Myron W. Wentz, Ph.D., Chairman
Salt Lake City, Utah
May 15, 1998
[USANA LOGO]
3838 West Parkway Blvd.
Salt Lake City, Utah 84120-6336
(801) 954-7100
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
The enclosed proxy is solicited by the Board of Directors of USANA, Inc.
("USANA" or the "Company") for use in voting at the Annual Meeting of
Shareholders to be held at the Hilton Hotel, 150 West 500 South, Salt Lake
City, Utah on Tuesday, June 23, 1998, at 10:00 a.m., Mountain Daylight Time,
and at any postponement or adjournment thereof, for the purposes set forth in
the attached notice. When proxies are properly dated, executed and returned,
the shares they represent will be voted at the Annual Meeting in accordance
with the instructions of the shareholder completing the proxy. If no specific
instructions are given, the shares will be voted FOR: (i) the election of the
nominees for directors set forth herein, (ii) ratification of the selection of
Grant Thornton LLP as the independent auditors of the Company, and (iii)
approval of certain amendments to the Company's 1995 Long-term Stock
Investment and Incentive Plan resulting from the combination of this plan with
the Director Stock Option Plan, without issuing or authorizing a net increase
in the number of shares available for issuance under the combined plans. A
shareholder giving a proxy has the power to revoke it at any time prior to its
exercise by voting in person at the Annual Meeting, by giving written notice
to the Company's Secretary prior to the Annual Meeting or by giving a later
dated proxy.
The presence at the meeting, in person or by proxy, of shareholders holding in
the aggregate a majority of the outstanding shares of the Company's common
stock entitled to vote shall constitute a quorum for the transaction of
business. The Company does not have cumulative voting for directors; a
plurality of the votes properly cast for the election of directors by the
shareholders attending the meeting, in person or by proxy, will elect
directors to office. A majority of votes properly cast upon any question
presented for consideration and shareholder action at the meeting, other than
the election of directors, shall decide the question. Abstentions and broker
non-votes will be counted for purposes of establishing a quorum, but will not
count as votes cast for the election of directors or any other questions and
accordingly will have no effect. Votes cast by shareholders who attend and
vote in person or by proxy at the Annual Meeting will be counted by inspectors
to be appointed by the Company.
The close of business on April 24, 1998 has been fixed as the record date for
determining the shareholders entitled to notice of, and to vote at, the Annual
Meeting. Each share shall be entitled to one vote on all matters. As of the
record date there were 6,417,119 shares of the Company's common stock
outstanding and entitled to vote. For a description of the principal
shareholders of the Company, see "Voting Securities and Principal Holders
Thereof" below.
This Proxy Statement and the enclosed Proxy are being furnished to
shareholders on or about May 15, 1998.
<PAGE>
PROPOSAL 1 -- ELECTION OF DIRECTORS
The Company's Bylaws provide that the number of Directors shall be determined
from time to time by the shareholders or the Board of Directors, but that
there shall be no less than three. Presently the Company's Board of Directors
consists of five members, all of whom are nominees for reelection at the
Annual Meeting. Each director elected at the Annual Meeting will hold office
until a successor is elected and qualified, or until the Director resigns, is
removed or becomes disqualified. Unless marked otherwise, proxies received
will be voted FOR the election of each of the nominees named below. If any
such person is unable or unwilling to serve as a Director at the date of the
Annual Meeting or any postponement or adjournment thereof, the proxies may be
voted for a substitute nominee designated by the proxy holders or by the
present Board of Directors to fill such vacancy, or for the balance of those
nominees named without nomination of a substitute, or the size of the Board
may be reduced accordingly. The Board of Directors has no reason to believe
that any of the nominees for Director will be unwilling or unable to serve if
elected.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH NOMINEE DIRECTOR
Directors and Executive Officers
The nominees for the Board of Directors in 1998 are Myron W. Wentz, Ph.D.,
David A. Wentz, Ronald S. Poelman, Robert Anciaux and Ned M. Weinshenker,
Ph.D. The following information is furnished with respect to the nominees.
Stock ownership information is shown under the heading "Voting Securities and
Principal Holders Thereof" and is based upon information furnished by the
respective individuals.
Myron W. Wentz, Ph.D., 57, has been the President, Chief Executive Officer and
Chairman of the Board of Directors of the Company since its inception. From
1969 to 1973, Dr. Wentz served as Director of Microbiology for Methodist
Medical Center, Proctor Community Hospital, and Pekin Memorial Hospital, all
in Peoria, Illinois. Dr. Wentz received a Ph.D. in Microbiology with an
emphasis in Immunology from the University of Utah, an MS in Microbiology from
the University of North Dakota, and a BS in Biology from North Central
College, Naperville, Illinois. Dr. Wentz founded Gull Laboratories, Inc.
("Gull," AMEX:GUL), the former parent of USANA, in 1974, and retains the
position of Chairman of the Board of that company. Gull develops, manufactures
and sells medical diagnostic test kits and related products.
David A. Wentz, 27, Vice President of Strategic Development, received a BS
degree in Bioengineering from the University of California, San Diego in
1993. Mr. Wentz served with the Company first on a part-time basis and then
was employed by the Company full time in 1994. He has served as a director of
the Company since its spin-off from Gull in 1993. From 1994 until 1995, he
served as Vice President and Executive Vice President of the Company. David A.
Wentz is the son of Dr. Myron Wentz.
Ronald S. Poelman, 44, has been a member of the Company's Board of Directors
since 1995. He is a partner in the Salt Lake City, Utah law firm of Jones,
Waldo, Holbrook & McDonough, where he is head of the Corporate Finance Group.
Prior to joining Jones, Waldo, Holbrook & McDonough in 1993, Mr. Poelman was a
shareholder at the Salt Lake City law firm of Parsons, Behle & Latimer from
1989 to 1992. His specialty is corporate and securities law. Mr. Poelman
received a BA in English from Brigham Young University and a JD from the
University of California, Berkeley.
Robert Anciaux, 52, is a resident of Brussels, Belgium. Mr. Anciaux joined
the Board of Directors in July 1996. Since 1982, Mr. Anciaux has been
self-employed as a venture capitalist in Europe, investing in various
commercial, industrial and real estate venture companies in Belgium and
abroad. Mr. Anciaux has been involved for a number of years as a shareholder
of various companies that manage institutional or private investment funds.
In some of these privately held companies, Mr. Anciaux has also served as a
director.
Ned M. Weinshenker, Ph.D., 55, has served as the President and CEO of IOMED,
Inc., in Salt Lake City, Utah, since 1992. IOMED develops, manufactures and
commercializes controllable drug delivery systems using iontophoretic
technology. Dr. Weinshenker also currently serves as a director of CyDex,
Inc., a drug delivery company headquartered in Kansas City, Missouri. Between
1986 and 1990, Dr. Weinshenker was a principal in MBW Management, a venture
capital firm in Los Altos, California. Dr. Weinshenker was President of
Churchill Oaks Consulting, a consultant to pharmaceutical and biotechnology
companies from 1983 to 1986. Dr. Weinshenker received a BS degree in
Chemistry from the Polytechnic Institute of Brooklyn and a Ph.D. in Organic
Chemistry from the Massachusetts Institute of Technology. Dr. Weinshenker
also spent a year at Harvard University as a National Institutes of Health
Postdoctoral Fellow.
Except for Dr. Wentz and his son David, there is no family relationship
between any director or executive officer of the Company and any other
director or executive officer.
Board of Directors Meetings, Committees and Compensation
The Company's Board of Directors took action at three duly noticed meetings
during the fiscal year ended December 27, 1997 and acted on other occasions by
unanimous written consent. Each director attended at least 75% of the
Company's special meetings of the Board of Directors. The Board has an Audit
Committee comprised of two outside directors of the Company, Mr. Poelman and
Mr. Anciaux. The Board also has an Executive Committee, the members of which
are Dr. Wentz, Mr. Wentz and Mr. Poelman. The Executive Committee also serves
as the Compensation Committee of the Board. During fiscal 1997, the Audit
Committee held one meeting, attended by both members of the Committee, and the
Executive Committee held three meetings, attended by all members of that
committee. The Compensation Committee also met three times as a committee
during fiscal 1997, with all members in attendance.
All Directors received an initial grant of options to purchase shares pursuant
to the 1995 Directors' Stock Option Plan (the "Director Plan"). Except for
the grant of options pursuant to the Director Plan, the Company's directors
received no fees or other compensation for their service on the Board or
otherwise participating in meetings of the Board or Committees of the Board,
whether in person or by telephone, although the Company's policy is to
reimburse Directors for their out-of-pocket expenses incurred in connection
with their services as Directors.
Executive Officers
The following information is furnished with respect to the executive officers
of the Company:
Myron W. Wentz, Ph.D., President and Chief Executive Officer (Biographical
information is provided above.)
David A. Wentz, Vice President of Strategic Development (Biographical
information is provided above.)
Gilbert A. Fuller, 57, is Vice President and Chief Financial Officer of the
Company. He has been with the Company since June 1996. Prior to joining the
Company, Mr. Fuller was the Executive Vice President of Winder Dairy, Inc., a
regional commercial dairy operation located in Utah. From May 1991 through
October 1993, Mr. Fuller was Chief Administrative Officer and Treasurer of
Melaleuca, Inc., a manufacturer and network-marketing distributor of personal
care products located in Idaho. From July 1984 through January 1991, Mr.
Fuller was the Vice President and Treasurer of Norton Company of Worcester,
Massachusetts, a multi-national manufacturer of ceramics and abrasives. Mr.
Fuller is a Certified Public Accountant and holds a BS in Accounting and an
MBA from the University of Utah.
Dallin A. Larsen, 38, is the Company's Vice President of Sales. The Company
has employed him since January 1993. He has been actively involved in network
marketing since 1989 and, for seven years, served as president of a
corporation that owned weight-loss clinics in several states. Mr. Larsen
graduated from Brigham Young University with a BS in Finance in 1986.
John B. ("Jeb") McCandless, 50, is Vice President and Chief Operating
Officer. He has been with the Company since October 1995. Before joining the
Company, he was a consultant with Apogee Strategic Services, of Sandy, Utah
from January 1994. From September 1987 to December 1993, Mr. McCandless was
the President of Utah Biomedical Test Laboratory, located in Salt Lake City,
Utah, where he supervised that company's business of contract research and
scientific testing. He also served in Managerial positions in toxicology at
both Atlantic Richfield Company in Los Angeles and at Biodynamics, Inc. in New
Jersey. Mr. McCandless received a BA in Zoology from the University of
California, Santa Barbara, an MS in Pathology from the University of Utah, and
MA and MBA degrees from The Claremont Graduate School in California.
In addition to the directors and executive officers identified above, the
following individuals also make significant contributions to the business of
the Company in the capacities indicated:
Timothy E. Wood, Ph.D., 49, is Director of Research and Development for
USANA. In this position, he coordinates the Company's activities in product
development and technical product support. Dr. Wood holds a Ph.D. in Biology
from Yale University and an MBA in Technology Management from the Gore School
of Business at Westminster College.
John H. McDonald, Ph.D., 62, is Senior Scientist at the Company and is active
in new product research and product formulation, as well as Technical
Services. He has been with the Company since its inception as a Gull division
in 1990. Dr. McDonald holds a Ph.D. from the University of Utah in
Experimental Biology, and received his training from the Department of
Pathology at the University of Utah Medical School.
Executive Compensation
The following table summarizes the fiscal year 1997 compensation of the Chief
Executive Officer of the Company and the Company's four most highly paid
executive officers (other than the Chief Executive Officer), collectively the
"Named Executive Officers," and the amounts earned by each of them during the
past three fiscal years:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual
Compensation Awards
Other Securities
Name and Annual Underlying
Principal Compensation Options/SARs
Position Year Salary ($) Bonus ($)(1) (#) (2)
- ------------------------------ ----- ---------- ----------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Myron W. Wentz 1995 $ 0 $ 0 $ 0 0
CEO/President 1996 $ 0 $ 0 $ 0 0
1997 $ 0 $ 0 $ 0 0
Gilbert A. Fuller (3) 1995 -- -- -- --
V.P./CFO 1996 $ 50,192 $ 3,032 $ 3,147 80,000
1997 $117,885 $ 0 $ 5,447 80,000(4)
Dallin A. Larsen 1995 $131,834 $ 9,849 $ 8,604 140,000
V.P. Sales 1996 $134,615 $ 8,678 $ 468,883
1997 $150,031 $ 0 $ 212,168
John B. McCandless(5) 1995 $ 20,542 $ 2,636 $ 0 100,000
V.P./COO 1996 $ 87,688 $ 5,606 $ 5,125
1997 $108,669 $ 0 $ 4,873
David A. Wentz (6) 1995 $ 88,769 $ 0 $ 1,323 62,500(7)
V.P. Strategic Development 1996 $ 28,846 $ 1,617 $ 279,807
1997 $ 85,769 $ 0 $ 135,553
</TABLE>
(1) Includes the approximate value of executive's use of a Company-owned
car, the Company's matching contribution to executive's 401(k) plan, and the
exercise of stock options.
(2) Shares subject to issuance upon exercise of options granted under a
compensation plan.
(3) Mr. Fuller became an employee of the Company in June 1996.
(4) Represents repricing of options granted in the prior year.
(5) Mr. McCandless became an employee of the Company in October 1995.
(6) Mr. Wentz was not employed by the Company from 12/8/95 through 8/15/96.
These options were received under the Director Stock Option Plan in Mr.
Wentz's capacity as a director of the Company.
Stock Option Grants in Fiscal 1997
The Company did not grant any stock options or stock appreciation rights
("SAR's") to any of the Named Executive Officers in fiscal 1997.
<PAGE>
Exercises of Stock Options in Fiscal 1997
The following table sets forth certain information concerning the exercise of
options and options held by the Named Executive Officers during fiscal year
1997.
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year
And Fiscal Year-end Option Values
Number of
Securities Value
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
Shares at 12/27/1997 at 12/27/1997
Acquired on Value Exercisable/ Exercisable/
Name Exercised (#) Realized ($) Unexercisable Unexercisable
- ---------------------- ------------- ------------ ---------------- --------------
<S> <C> <C> <C> <C>
Myron W. Wentz 0 N/A N/A N/A
Gilbert A. Fuller 0 N/A 16,000/64,000 31,400/125,760
Dallin A. Larsen 20,000 204,000 0/100,000 0/1,457,500
John B. McCandless 0 N/A 40,000/60,000 317,000/475,000
David A. Wentz 12,500 127,500 0/37,500 0/546,563
</TABLE>
Long-term Incentive Plans ("LTIPs")
The Company did not make any awards under any LTIP during the fiscal year
ended December 27, 1997.
Compensation Plans
At the Annual Meeting of shareholders in 1995, the Company's shareholders
approved the Company's 1995 Long-term Stock Investment and Incentive Plan (the
"Stock Option Plan") and the Director's Stock Option Plan (the "Director
Plan"). Upon recommendation of the Compensation Committee, the Board of
Directors of the Company has adopted an Amended and Restated Plan without
increasing the aggregate number of shares available for issuance pursuant to
grants of awards made under the plan and intended to permit awards to be made
to Directors of the Company under the plan. The Director Plan will be
terminated and the options previously granted under that plan will become
subject to the Stock Option Plan. Future grants to Directors will be made
under the Stock Option Plan at the discretion of the Plan Committee and
subject to the terms of the plan. These changes will not materially alter the
terms of any outstanding option agreement or award. The provisions of the
Amended and Restated Plan, as amended, are discussed below under "Proposal 3 -
Amendments to Stock Option Plan."
<PAGE>
Employment Contracts and Other Arrangements
The Company has an employment agreement with Gilbert A. Fuller, its Vice
President of Finance and Chief Financial Officer. The term of the agreement
runs through May 31, 2000. The agreement provides for payment of a base
salary, with annual increases through the term of the agreement. In addition,
the agreement requires adoption of a cash bonus program for executive officers
commencing in 1998 and Mr. Fuller's participation in such program, subject to
the terms and conditions thereof. The agreement also contains covenants
concerning non-competition and confidentiality, termination with or without
cause and, in the case of the latter, payment of a severance based on the
remaining term of the agreement. Mr. Fuller is also entitled to receive the
benefits customarily afforded to executives of the Company, including
participating in retirement and other plans.
Report on Repricing of Options
In March 1997, the Board of Directors adjusted the exercise price of options
previously granted under the Stock Option Plan and the Director Plan to
certain individuals, including one of the Named Executive Officers. The
Compensation Committee of the Board recommended the changes to bring the
exercise prices closer to the market price for the Company's Common Stock at
the time of the repricing such that the options continued to provide incentive
for the persons who held them. The new exercise price was based on the
average daily trading price for the five trading days preceding the date on
which the repricing was adopted. The following table summarizes information
concerning the adjustments made to the exercise price of options held by all
executive officers of the Company during the past five fiscal years.
<TABLE>
<CAPTION>
Option Repricings (1)
Market
Number of Price Exercise Length of
Securities of Stock at Price at Original
Underlying Time of Time of Option Term
Options/ Repricing Repricing Remaining at
SARs or or New Date of
Repriced or Amendment Amendment Price Repricing or
Name Date Amended (#) ($) ($) ($) Amendment
- ------------------ ------ ----------- ----------- ---------- ----- -------------
<S> <C> <C> <C> <C> <C> <C>
Myron W. Wentz N/A 0 N/A N/A N/A N/A
Gilbert A. Fuller 3/3/97 30,000 21.04 15.66 9 yrs. 9 mos.
50,000 17.93 15.66 9 yrs. 4 mos.
Dallin A. Larsen N/A 0 N/A N/A N/A N/A
John B. McCandless N/A 0 N/A N/A N/A N/A
David A. Wentz N/A 0 N/A N/A N/A N/A
</TABLE>
(1) Item 402(I) of Regulation S-K under the Securities Act of 1933
requires such information to be provided for each of the last ten completed
fiscal years. The Company has only been in existence since 1993.<PAGE>
Compensation Committee Report on Executive Compensation
Preliminary Note: Notwithstanding anything to the contrary set forth in any of
the previous filings made by the Company under the Securities Act or the 1934
Act that might incorporate future filings, including, but not limited to, this
Annual Report on Form 10-K, in whole or in part, the following Executive
Compensation Report and the Stock Performance Graph appearing herein shall not
be deemed to be incorporated by reference into any such future filings.
This Compensation Report discusses the Company's compensation policies and the
basis for the compensation paid to its executive officers (including the Named
Executive Officers), during the year ended December 27, 1997.
Compensation Policy. The Committee's policy with respect to executive
compensation has been designed to:
Adequately and fairly compensate executive officers in relation to their
responsibilities, capabilities and contributions to the Company and in a
manner that is commensurate with compensation paid by companies of comparable
size or within the Company's industry;
Reward executive officers for the achievement of key operating objectives and
for the enhancement of the long-term value of the Company; and
Align the interests of the executive officers with those of the Company's
shareholders.
The components of compensation paid to executive officers consist of: (a)
base salary, (b) incentive compensation in the form of stock options awarded
by the Company under the Company's Stock Option Plan and (c) certain other
benefits. In 1998, the Committee will adopt a cash bonus program as an
additional component of executive compensation. The Executive Committee of
the Board of Directors functions as the Compensation Committee and is
responsible for reviewing and approving all compensation paid by the Company
to its executive officers and members of the Company's senior management
team.
Components of Compensation. The primary components of compensation paid by
the Company to its executive officers and senior management personnel, and the
relationship of such components of compensation to the Company's performance,
are discussed below:
Base Salary. The Compensation Committee periodically reviews and approves the
base salary paid by the Company to its executive officers and members of the
senior management team. Adjustments to base salaries are determined based upon
a number of factors, including the Company's performance (to the extent such
performance can fairly be attributed or related to each executive's
performance), as well as the nature of each executive's responsibilities,
capabilities and contributions. In addition, the Compensation Committee
periodically reviews the base salaries of its senior management personnel in
an attempt to ascertain whether those salaries fairly reflect job
responsibilities and prevailing market conditions and rates of pay. The
Compensation Committee believes that base salaries for the Company's executive
officers have historically been reasonable in relation to the Company's size
and performance in comparison with the compensation paid by similarly sized
companies or companies within the Company's industry.
Incentive Compensation. As discussed above, a substantial portion of
each executive officer's compensation package is in the form of incentive
compensation designed to reward the achievement of key operating objectives
and long-term increases in shareholder value. The Compensation Committee
believes that the stock options granted under the Stock Option Plan reward
executive officers only to the extent that shareholders have benefited from
increases in the value of the Company's Common Stock.
Other Benefits. The Company maintains certain other plans and arrangements for
the benefit of its executive officers and members of senior management. The
Company believes these benefits are reasonable in relation to the executive
compensation practices of other similarly sized companies or companies within
the Company's industry.
Compensation of the Chief Executive Officer. Dr. Wentz has served as the
Chief Executive Officer of the Company since its inception. Dr. Wentz does
not receive any compensation from the Company for his services and he has in
the past declined to accept any options or other awards under any stock option
or stock incentive plan that he might otherwise have been entitled to receive
as an executive officer or director of the Company.
Conclusion. The Compensation Committee believes that its policies further the
shareholders' interests because a significant part of executive compensation
is based upon the Company achieving its financial and other goals and
objectives. At the same time, the Compensation Committee believes that its
policies encourage responsible management of the Company in the short-term.
The Compensation Committee regularly considers executive compensation issues
so that its practices are as effective as possible in furthering shareholder
interests.
The Compensation Committee bases its review on the experience of its own
members, on information requested from management personnel, and on
discussions with and information compiled by various independent consultants
retained by the Company.
Respectfully submitted,
Compensation Committee:
Myron W. Wentz, Ph.D.
Ronald S. Poelman
David A. Wentz
<PAGE>
Stock Performance Graph
The following graph compares the yearly cumulative total returns from the
Company's Common Stock, the Nasdaq Total Return Index, and ten companies
selected in good faith by the Company from the Company's industry (the "Peer
Group"). Each of the companies included in the Peer Group markets or
manufactures products similar to the Company's products or markets its
products through a similar marketing channel. The Peer Group is comprised of
the following companies: NBTY, Inc., Nature's Sunshine Products, Inc., Avon
Products, Inc., Herbalife International, Inc., General Nutrition Companies,
Inc., Perrigo Company, BeautiControl Cosmetics, Inc., Worthington Foods, Inc.,
Whole Foods Market, Inc., and Reliv International, Inc.
The Company's shares commenced trading in May 1993. The graph assumes an
investment on May 31, 1993 of $100 and reinvestment of all dividends into
additional shares of the same class of equity, if applicable to the stock or
index. The period begins with the commencement of trading for USANA in May
1993 and ends December 31, 1997.
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE RETURN AMONG USANA, INC., NASDAQ TOTAL
RETURN INDEX AND PEER GROUP
<CAPTION>
Measurement period USANA, Inc. NASDAQ Index Peer Group
- ------------------ ------------ ------------ ----------
<S> <C> <C> <C>
Measurement pt.
5/31/1993 $ 100 $100 $100
FYE 12/1993 $ 125 $111 $123
FYE 12/1994 $ 400 $109 $ 99
FYE 12/1995 $3,800 $154 $124
FYE 12/1996 $7,200 $189 $180
FYE 12/1997 $7,250 $232 $229
</TABLE>
PROPOSAL 2 - APPROVAL OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has selected Grant Thornton LLP, as the
independent public accountant to audit the financial statements of the Company
and its subsidiaries for the fiscal year ending January 2, 1999. Grant
Thornton LLP has served as the Company's independent public accountant since
the fiscal year ended December 31, 1995.
At the Annual Meeting, shareholders will be asked to ratify the selection by
the Board of Directors of Grant Thornton LLP as the Company's independent
accountant.
THE BOARD RECOMMENDS SHAREHOLDER APPROVAL OF THE SELECTION OF AUDITORS
Representatives of Grant Thornton LLP, are expected to attend the 1998 Annual
Meeting and will have an opportunity to make a statement if they desire to do
so, and they will be available to answer appropriate questions from
shareholders.
PROPOSAL 3 - AMENDMENTS TO STOCK OPTION PLAN
In 1998, the Compensation Committee recommended, and the Board of Directors
approved the consolidation of the Company's two stock option plans by
combining the Director Stock Option Plan with the Long-term Stock Investment
and Incentive Plan. The combination of the plans terminates the Director Plan
and brings all outstanding stock options under the provisions of one plan.
The combined plans will be referred to below as the "Amended and Restated
Plan." Under the Amended and Restated Plan the total number of shares that
may be issued upon exercise of awards granted under the plan will be 2,000,000
shares, the sum of the shares previously available under the Long-term Stock
Investment and Incentive Plan (1,400,000 shares) and the Director Plan
(600,000 shares). No additional shares will be allocated to the Amended and
Restated Plan. As of December 27, 1997, a total of 885,500 shares were
available for issuance under both plans. No presently outstanding options or
awards will be materially altered by the Amended and Restated Plan. The
principal new terms adopted as part of the Amended and Restated Plan are the
following:
The definition of persons eligible to participate in the Amended and Restated
Plan includes employees, officers and directors of the Company and its
subsidiaries, as well as consultants and other persons who contribute to the
business of the Company as selected at the discretion of the committee
administering the plan ("Committee").
The Committee will be comprised of two or more directors of the Company,
selected by the Board of Directors. The Committee has broad authority to
select persons to receive awards under the plan and to establish the terms and
conditions applicable to the exercise of such awards and the duration of the
awards.
There is no change in the type of awards that may be granted under the plan
from the nature and type of awards that were available under the separate
plans.
The Board of Directors believes that the combination of the plans will provide
the Compensation Committee with the broadest degree of flexibility in
compensating persons who contribute to the successful operation and growth of
the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE PLAN
AMENDMENTS.
Voting Securities and Principal Holders Thereof
The following table sets forth, as of April 10, 1998, the number of shares of
the Company's Common Stock, no par value, of each person known to the Company
to be the beneficial owner of more than five percent of the Company's Common
Stock and by the executive officers and directors of the Company (including
Dr. Weinshenker, a nominee to the Board) individually and as a group. Except
as indicated in the footnotes below, each of the persons listed exercises sole
voting and investment power over the shares of the Company's Common Stock
listed for such person in the table. Unless otherwise indicated, the mailing
address of the shareholder is the address of the Company, 3838 West Parkway
Blvd., Salt Lake City, Utah 84120.
<TABLE>
<CAPTION>
Name/Address Number of Shares Percent of Class (1)
- ------------------------------- ---------------- --------------
<S> <C> <C>
5% Beneficial Owners
Gull Holdings, Ltd. 3,893,116 60.7%
4 Finch Road
Douglas, Isle of Man
Directors and Executive Officers
Myron W. Wentz, Ph.D. 3,893,116 (2) 60.7%
President and Chief Executive Officer
Chairman of the Board
Ronald S. Poelman, Director 25,000 (3) *
170 South Main Street, Suite 1500
Salt Lake City, Utah 84101
Robert Anciaux, Director 12,500 (3) *
Societe d'Etude et D'Inestissement
Av Du Manoir 30
1410 Waterloo, Belgium
David A. Wentz, Director and 25,438 (4) *
Vice President of Strategic Development
Ned M. Weinshenker, Ph.D., Nominee 0 -
John B. ("Jeb") McCandless 40,221 (5) *
Vice President and Chief Operating Officer
Gilbert A. Fuller 16,697 (6) *
Vice President and Chief Financial Officer
Dallin Larsen 25,719 (7) *
Vice President of Sales
Officers and Directors as a group (9 persons) 4,051,191(3) 62.3%
</TABLE>
- --------------------------
* Less than one percent. Officer and Director group total does not
include duplicate entries. All entries exclude beneficial ownership of shares
issuable pursuant to options that have not vested or that are not otherwise
exercisable as of the date hereof and which will not become vested or
exercisable within 60 days of the date of this Proxy Statement.
(1) Percentages rounded to nearest one-tenth of one percent.
(2) All shares held of record by Gull Holdings, Ltd. ("Holdings"), an Isle
of Man company owned 100% by Dr. Wentz. Because of his control of Holdings,
Dr. Wentz is deemed to be the beneficial owner of the shares owned of record
by Holdings.
(3) Includes shares issuable pursuant to options which are presently
exercisable or which become exercisable within 60 days of the date of this
proxy statement.
(4) Includes 12,500 shares issuable pursuant to options which are
presently exercisable or which become exercisable within 60 days of the date
of this proxy statement, 12,500 shares held of record and 438 shares held in
the executive's 401(k) account.
(5) Includes 40,000 shares issuable pursuant to options which are
presently exercisable or which become exercisable within 60 days of the date
of this proxy statement and 221 shares held in the executive's 401(k) account.
(6) Includes 16,000 shares issuable pursuant to options which are
presently exercisable or which become exercisable within 60 days of the date
of this proxy statement, 400 shares held of record and 297 shares held in the
executive's 401(k) account.
(7) Includes 20,000 shares issuable pursuant to options which are
presently exercisable or which become exercisable within 60 days of the date
of this proxy statement, 5,000 shares held of record and 719 shares held in
the executive's 401(k) account.
The Company is not aware of any arrangements, including any pledge of the
Company's securities, the operation of which may at a subsequent date result
in a change in control of the Company.
Compliance with Section 16(A) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who beneficially own more than ten percent
of the Company's common stock to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors
and greater than ten percent shareholders are also required by regulation of
the Securities and Exchange Commission to furnish the Company with copies of
all Section 16(a) forms which they file.
Based solely upon a review of the forms and amendments thereto furnished to
the Company under Rule 16a-3(e) during the fiscal year ended December 27,
1997, and with respect to such year, as well as certain representations of the
officers and directors specified by such rule, the Company believes that all
reports required to be filed pursuant to Section 16(a) were filed.
<PAGE>
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors of the Company
does not intend to present and has not been informed that any other person
intends to present a matter for action at the 1998 Annual Meeting other than
as set forth herein and in the Notice of Annual Meeting. If any other matter
properly comes before the meeting, it is intended that the holders of proxies
will act in accordance with their best judgment.
The accompanying proxy is being solicited on behalf of the Board of Directors
of the Company. In addition to the solicitation of proxies by mail, certain
of the officers and employees of the Company, without extra compensation, may
solicit proxies personally or by telephone, and, if deemed necessary, third
party solicitation agents may be engaged by the Company to solicit proxies by
means of telephone, facsimile or telegram, although no such third party has
been engaged by the Company as of the date hereof. The Company will also
request brokerage houses, nominees, custodians and fiduciaries to forward
soliciting materials to the beneficial owners of Common Stock held of record
and will reimburse such persons for forwarding such material. The cost of
this solicitation of proxies will be borne by the Company.
ANNUAL REPORT
Copies of the Company's Annual Report on Form 10-K (including financial
statements and financial statements schedules) filed with the Securities and
Exchange Commission may be obtained without charge by writing to the Company -
Attention: Investor Relations, 3838 West Parkway Blvd., Salt Lake City, Utah
84120-6336.
A copy of the Company's 1997 Annual Report to Shareholders is being mailed
with this Proxy Statement, but is not deemed a part of the proxy soliciting
material.
SHAREHOLDER PROPOSALS
The Company must receive any shareholder proposal intended to be considered
for inclusion in the proxy statement for presentation in connection with the
1999 Annual Meeting of Shareholders by December 31, 1998. The proposal must
be in accordance with the provisions of Rule 14a-8 promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of 1934.
The Company suggests that any such request be submitted by certified mail -
return receipt requested. The Board of Directors will review any proposal
received by December 31, 1998, and determine whether it is a proper proposal
to present to the 1999 Annual Meeting.
The enclosed Proxy is furnished for you to specify your choices with respect
to the matters referred to in the accompanying notice and described in this
Proxy Statement. If you wish to vote in accordance with the Board's
recommendations, merely sign, date and return the Proxy in the enclosed
envelope which requires no postage if mailed in the United States. A prompt
return of your Proxy will be appreciated.
By Order of the Board of Directors,
Myron W. Wentz, Ph.D., Chairman
Salt Lake City, Utah
May 15, 1998
<PAGE>
PROXY
[USANA LOGO]
a Utah corporation
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Myron W. Wentz, Ph.D. and Gilbert A. Fuller
and each of them as Proxies, with full power of substitution, and hereby
authorizes them to represent and vote, as designated below, all shares of
Common Stock of the Company held of record by the undersigned as of April 24,
1998, at the Annual Meeting of Shareholders to be held at the Hilton Hotel,
150 West 500 South, Salt Lake City, Utah on Tuesday, June 23, 1998, at 10:00
a.m., Mountain Daylight Time or at any adjournment thereof.
1. Election of Directors.
FOR WITHHOLD AS TO ALL FOR ALL EXCEPT
/ / / / / /
(INSTRUCTIONS: IF YOU MARK THE "FOR ALL EXCEPT" CATEGORY ABOVE, INDICATE THE
NOMINEE(S) AS TO WHICH YOU DESIRE TO WITHHOLD AUTHORITY BY STRIKING A LINE
THROUGH SUCH NOMINEE(S) NAME IN THE LIST BELOW:)
Myron W. Wentz, Ph.D. David A. Wentz Ronald S. Poelman
Robert Anciaux Ned M. Weinshenker, Ph.D.
2. To approve and ratify the selection of Grant Thornton LLP as the
Company's independent accountants.
FOR AGAINST ABSTAIN
/ / / / / /
3. To approve and ratify the combination of the Company's Long-term Stock
Investment and Incentive Plan and Director Stock Option Plan as the Amended
and Restated Plan, without issuing or authorizing a net increase in the shares
issuable pursuant to the plan as amended.
FOR AGAINST ABSTAIN
/ / / / / /
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2 AND 3.
DATE: ____________ ______________________________________________
Signature
______________________________________________
Signature of co-tenant holder, if any
PLEASE SIGN EXACTLY AS THE SHARES ARE ISSUED. WHEN CO-TENANTS HOLD SHARES,
BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY, AS EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE
SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. PLEASE
DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
